<PAGE>
TOTAL NUMBER OF PAGES IS 14
PAGE 1 OF 14
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended March 31, 1998
Commission File Number 0-27692
OrCAD, INC.
(Registrant)
Incorporated in the State of Delaware
I.R.S. Employer Identification Number 93-1062832
9300 S.W. Nimbus Avenue, Beaverton, Oregon 97008
Telephone: (503) 671-9500
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
On March 31, 1998, 9,265,002 shares of the registrant's common stock were issued
and outstanding.
<PAGE>
OrCAD, INC.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NO.
- -------- ------------------------------------------------- ------------------ --------
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 1998
and December 31, 1997 3
Consolidated Statements of Operations - Three months
ended March 31, 1998 and 1997 4
Consolidated Statements of Cash Flows - Three months
ended March 31, 1998 and 1997 5
Notes to consolidated financial statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
- -------- -----------------
Item 2. CHANGES IN SECURITIES 13
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES 14
</TABLE>
2
<PAGE>
OrCAD, Inc.
CONSOLIDATED BALANCE SHEET
(In thousands)
<TABLE>
<CAPTION>
March 31,
1998 December 31,
(Unaudited) 1997
----------- ------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $23,551 $31,618
Short-term investments 10,435 3,408
Trade accounts receivable, net of doubtful accounts
and sales return allowances of $913 and $793 7,609 8,800
Inventory, net 627 675
Deferred taxes 849 845
Other current assets 1,783 2,503
------- -------
Total current assets 44,854 47,849
------- -------
Investments, long-term 3,889 2,722
Fixed assets, net 3,538 3,360
Purchased software technology, net 421 474
Goodwill and intangible assets, net 2,238 2,378
Other assets 265 124
------- -------
Total assets $55,205 $56,907
======= =======
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 613 $ 661
Accrued payroll and related liabilities 1,763 2,241
Accrued liabilities 3,627 1,870
Accrued income taxes -- 1,081
Deferred revenue 4,728 4,881
------- -------
Total current liabilities 10,731 10,734
Deferred taxes 19 19
Stockholders' equity:
Common stock 93 92
Additional paid-in capital 37,606 37,583
Retained earnings 7,025 8,604
Unrealized gain (loss) on investments, net (1) 5
Notes receivable - employee stock purchases (158) (47)
Foreign currency translation adjustment (110) (83)
------- -------
Total stockholders' equity 44,455 46,154
------- -------
Total liabilities and stockholders' equity $55,205 $56,907
======= =======
</TABLE>
See notes to Consolidated Financial Statements.
3
<PAGE>
OrCAD, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three-months ended
---------------------------------
March 31, March 31,
1998 1997
--------------- ---------------
Revenue:
Products $ 8,806 $ 8,086
Service 2,835 1,781
--------------- ---------------
Total revenue 11,641 9,867
Cost and expenses:
Cost of revenue - products 864 1,187
Cost of revenue - service 561 411
Research and development 3,042 2,713
Marketing and sales 4,655 3,282
General and administrative 1,361 1,133
Merger-related costs 4,081 --
--------------- ---------------
Total cost and expenses 14,564 8,726
--------------- ---------------
Income (loss) from operations (2,923) 1,141
--------------- ---------------
Other income (expense):
Interest income (expense), net 501 454
Other, net (7) (6)
--------------- ---------------
494 448
Income (loss) before income taxes (2,429) 1,589
Income tax expense (benefit) (850) 609
--------------- ---------------
Net income (loss) $ (1,579) $ 980
=============== ===============
Basic net income (loss) per share $ (0.17) $ 0.11
=============== ===============
Diluted net income (loss) per share $ (0.17) $ 0.10
=============== ===============
Shares used in basic net income (loss)
per share calculation 9,252 9,114
=============== ===============
Shares used in diluted net income (loss)
per share calculation 9,252 9,378
=============== ===============
See notes to Consolidated Financial Statements.
4
<PAGE>
OrCAD, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three-months Ended
-----------------------------
March 31, March 31,
1998 1997
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(1,579) $ 980
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 462 385
Provision for losses on trade accounts receivable and sales returns 155 (19)
Provision for inventory reserves 9 (11)
Deferred income taxes (5) 7
Changes in assets and liabilities:
Trade accounts receivable 1,437 (724)
Inventory 31 235
Royalty receivable -- (98)
Other current assets 537 (435)
Accounts payable (368) 37
Accrued payroll and related liabilities (439) (141)
Accrued liabilities 1,640 348
Deferred revenue (72) (392)
Accrued income taxes (1,098) 390
------- -------
Total adjustments 2,289 (418)
------- -------
Net cash provided by operating activities 710 562
------- -------
Cash flows from investing activities:
Acquisition of fixed assets (456) (805)
Proceeds from maturity (purchase) of investments, net (8,200) 81
------- -------
Net cash used in investing activities (8,656) (724)
------- -------
Cash flows from financing activities:
Repayment (issuance) of notes receivable - employee stock purchases, net (111) (9)
Issuance (repurchase) of common stock, net 24 (19)
------- -------
Net cash used in financing activities (87) (28)
------- -------
Effects of exchange rate on cash (34) (24)
------- -------
Net decrease in cash and cash equivalents (8,067) (214)
------- -------
Cash and cash equivalents at the beginning of period 31,618 23,103
------- -------
Cash and cash equivalents at the end of period $23,551 $22,889
======= =======
Supplemental Disclosures of Cash Flow Information:
Income taxes paid $ 729 $ 377
</TABLE>
See notes to Consolidated Financial Statements.
5
<PAGE>
OrCAD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share data)
(Unaudited)
1. Basis of Presentation
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles. However, certain information or
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed, or omitted, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the
statements include all adjustments necessary (which are of a normal and
recurring nature) for the fair presentation of the results of the interim
periods presented. These financial statements should be read in
conjunction with the Company's audited consolidated financial statements
for the year ended December 31, 1997, as included in the Company's Annual
Report on Form 10-KSB, and the unaudited pro forma condensed financial
statements included in the Company's Registration Statement on Form S-4 as
filed with the Securities and Exchange Commission on December 12, 1997.
2. Acquisitions
On January 20, 1998 OCA Merger Corporation, a wholly-owned subsidiary of
OrCAD, was merged with and into MicroSim Corporation (MicroSim) and all of
the issued and outstanding shares of MicroSim Common Stock and all of the
rights to acquire MicroSim Common Stock were converted into and exchanged
for 2,427,632 shares of OrCAD Common Stock (the "Merger"). The Merger was
accounted for as a pooling of interests in 1998. The combined financial
statements of OrCAD and MicroSim are included in this report and prior
periods presented have been restated to reflect the Merger.
On April 15, 1998, OrCAD U.K. Ltd., a wholly-owned subsidiary of the
Company formed in March of 1998, purchased certain assets and assumed
certain liabilities of ARS Microsystems Ltd. (ARS) for approximately $1
million. ARS was previously the Company's value added reseller in the
United Kingdom. The cost of the acquisition is being allocated on the
estimated fair value of the assets acquired and the liabilities assumed.
3. Basic and Diluted Net Income (Loss) Per Share
Basic net income (loss) per share was computed using the weighted average
number of common shares outstanding during the period. Diluted net income
per share was computed using the weighted average number of common and
dilutive common equivalent shares outstanding during periods in which the
Company reports net income. Dilutive common equivalent shares consist of
common stock issuable upon exercise of stock options. For diluted net
income per share, 264,000 shares were added to the weighted average number
of shares outstanding for the first quarter of 1997, representing potential
dilution for stock options outstanding, calculated using the treasury
stock method.
4. Use of Estimates
Generally accepted accounting principles require management to make
estimates and assumptions that affect the reported amount of assets,
liabilities and contingencies at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
6
<PAGE>
5. Revenue Recognition
During the first quarter of 1998, the Company adopted Statement of Position
(SOP) 97-2, "Software Revenue Recognition." The provisions of SOP 97-2 have
been applied to transactions entered into beginning January 1, 1998. SOP
97-2 generally requires revenue earned on software arrangements involving
multiple elements to be allocated to each element based on the relative
fair values of the elements. The revenue allocated to software products is
generally recognized upon the delivery of the products. The revenue
allocated to extended support agreements is recognized ratably over the
term of the maintenance agreement and revenue allocated to service elements
is recognized as the services are performed.
6. Software Development Costs
Under Statement of Financial Accounting Standards No. 86 (SFAS 86),
software development costs are to be capitalized beginning when a product's
technological feasibility has been established and ending when a product is
made available for general release to customers. To date, the establishment
of technological feasibility of the Company's products has occurred shortly
before general release, and accordingly no costs have been capitalized.
7. Income Taxes
The provision for income taxes has been recorded based on the Company's
current estimate of the Company's annual effective tax rate. This rate
differs from the combined federal and state statutory rate of approximately
38.5% primarily due to the benefit of the Company's foreign sales
corporation and the utilization of research and experimentation tax
credits.
8. Cash Equivalents and Investments
Cash equivalents consist of highly liquid investments with original
maturity dates of three months or less. Cash equivalents are stated at cost
and consist primarily of money market funds, commercial paper, and
municipal bonds. The carrying amount approximates fair value due to the
short-term nature of these investments. Those instruments with original
maturity dates greater than three months and less than one year from the
balance sheet date are considered to be short-term investments. Investments
with original maturity dates greater than one year from the balance sheet
date are considered to be long-term investments. Investments, which
primarily consist of corporate debt securities, U.S. Treasury Notes and
municipal auction preferred stock, are reported at fair value, and are
classified as available-for-sale securities. The cost of securities sold is
determined using the specific identification method when computing realized
gains and losses. Fair value is determined using available market
information.
9. Comprehensive Income (Loss)
In June 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 130, Reporting
Comprehensive Income. This statement establishes standards for reporting
comprehensive income and its components in the consolidated financial
statements. Comprehensive loss for the first quarter of 1998 was $1,612,
which differs from a net loss for the same period of $1,579 due to an
unrealized loss on investments of $6 and a foreign currency translation
loss of $27. Comprehensive income for the first quarter of 1997 was $951,
which differs from net income for the same period of $980 due to an
unrealized loss on investments of $5 and a foreign currency translation
loss of $24.
7
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Introduction
OrCAD develops, markets, and supports software products that assist
electronics designers in designing integrated circuits ("ICs"), printed circuit
boards ("PCBs"), field-programmable gate arrays ("FPGAs"), and complex
programmable logic devices ("CPLDs"). ICs, PCBs, FPGAs and CPLDs are found in a
majority of today's electronic products, and are often referred to as
"mainstream" components. OrCAD's products enable electronics designers working
on personal computers to reduce time to market, improve product capability and
reduce design costs. The Company operates primarily in one business segment,
comprising the electronic design automation industry.
On January 20, 1998 OCA Merger Corporation, a wholly-owned subsidiary of
OrCAD, was merged with and into MicroSim Corporation (MicroSim) and all of the
issued and outstanding shares of MicroSim Common Stock and all of the rights to
acquire MicroSim Common Stock were converted into and exchanged for 2,427,632
shares of OrCAD Common Stock (the "Merger"). The Merger was accounted for as a
pooling of interests in 1998. The combined financial statements of OrCAD and
its wholly-owned subsidiary, MicroSim, are included in this report and all prior
periods presented have been restated to reflect the Merger. The accompanying
consolidated financial statements also include the accounts of the Company's
other subsidiaries. All intercompany balances have been eliminated in
consolidation.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
TOTAL REVENUES
The Company derives revenue from the licensing of its software products and
from the provision of maintenance, training and consulting services to
customers. The Company recognizes revenue from software licenses after shipment
of product and when no significant contractual obligations remain outstanding.
Service revenue is derived primarily from extended support agreements that
provide customers access to product enhancements, technical support, bulletin
board services and a subscription to OrCAD Design Desktop Quarterly, a
newsletter produced by the Company. Revenue from each extended support
agreement is deferred and recognized ratably over the term of the support
agreement. Revenue from customer training and consulting is recognized as
services are performed.
Total revenue increased 18% from $9.9 million in the first quarter of 1997
to $11.6 million in the first quarter of 1998. The increase in total revenue
was due to growth in both product revenue and service revenue. As a percentage
of total revenue, product revenue decreased from 82% in the first quarter of
1997 to 76% in the first quarter of 1998. Conversely, service revenue increased
as a percentage of total revenue from 18% in the first quarter of 1997 to 24% in
the first quarter of 1998.
Product revenue increased 9% from $8.1 million in the first quarter of 1997
to $8.8 million in the first quarter of 1998. Sales of OrCAD Express, OrCAD
PSpice and the OrCAD line of Component Information System (CIS) products
accounted for most of the increase in product revenue.
8
<PAGE>
Service revenue increased 59% from $1.8 million in the first quarter of
1997 to $2.8 million in the first quarter of 1998. The increase in service
revenue from the first quarter of 1997 to the first quarter of 1998 was
primarily attributable to increased sales of extended support agreements and
customer training.
Total North American revenue increased 33% from $6 million in the first
quarter of 1997 to $7.9 million in the first quarter of 1998. Total revenue
generated outside of North America decreased 5% from $3.9 million in the first
quarter of 1997 to $3.7 million in the first quarter of 1998. As a percentage
of the Company's total revenue, North American revenue increased from 60% in the
first quarter of 1997 to 68% in the first quarter of 1998. The increase in the
proportion of revenue generated within North America was attributable to the
continued expansion of the Company's telesales force and the addition of a field
sales organization in North America in the second quarter of 1997.
COST OF REVENUE
The cost of product revenue represents the costs associated with the
licensing of the Company's products, such as expenses of reproducing product
documentation, disks and packaging, hardware locks and royalties paid to
external developers. The cost of product revenue decreased 27% from $1.2
million in the first quarter of 1997 to $864,000 in the first quarter of 1998.
The decrease was primarily attributable to decreased materials costs, the
elimination of commissions payable to a former North American reseller, and
reduced royalty costs due to the acquisition of certain technology, which was
previously licensed. As a percentage of product revenue, cost of product
revenue decreased from 15% in the first quarter of 1997 to 10% in the first
quarter of 1998. This decrease was primarily the result of the lower materials
costs and royalty costs for OrCAD Capture CIS, and OrCAD Express CIS.
The cost of service revenue includes the costs of providing software
maintenance, such as technical support, and the costs of providing consulting
and training. The cost of service revenue increased 36% from $411,000 in the
first quarter of 1997 to $561,000 in the first quarter of 1998. This increase
was primarily attributable to the expansion of the Company's Enterprise Services
and technical support groups. As a percentage of service revenue, the cost of
service revenue decreased from 23% in the first quarter of 1997 to 20% in the
first quarter of 1998. This decrease was primarily due to the higher percentage
increase in service revenue as compared to cost of service revenue.
RESEARCH AND DEVELOPMENT
Research and development expenses include the costs of developing new
products and enhancements to existing products. Software development costs are
generally expensed as incurred, in that technological feasibility is generally
not established until shortly before the release of a new product and no
material development costs are incurred after establishment of technological
feasibility. Research and development expenses increased 12% from $2.7 million
in the first quarter of 1997 to $3 million in the first quarter of 1998. The
increase in research and development expenses was primarily attributable to
increases in third-party consulting and personnel-related costs. As a
percentage of total revenue, research and development expenses decreased from
27% in the first quarter of 1997 to 26% in the first quarter of 1998. The
Company expects research and development expenses to continue to increase in
absolute terms.
9
<PAGE>
MARKETING AND SALES
Marketing and sales expenses include salaries, commissions and related
personnel costs, and other sales and promotional expenses. Marketing and sales
expenses increased 42% from $3.3 million in the first quarter of 1997 to $4.7
million in the first quarter of 1998. Total marketing and sales expenses
increased as a result of continued expansion of the Company's sales and
marketing organizations, and increased promotional activity. As a percentage of
total revenue, marketing and sales expenses increased from 33% in the first
quarter of 1997 to 40% in the first quarter of 1998. The Company expects
marketing and sales expenses to continue to increase in absolute terms.
GENERAL AND ADMINISTRATIVE
General and administrative expenses include the costs associated with the
Company's executive office, human resources, finance, and information systems
and operations functions. General and administrative expenses increased 20% from
$1.1 million in the first quarter of 1997 to $1.4 million in the first quarter
of 1998. The increase was primarily due to a general increase in personnel
costs. As a percentage of total revenue, general and administrative expenses
increased from 11% in the first quarter of 1997 to 12% in the first quarter of
1998.
MERGER-RELATED COSTS
In the first quarter of 1998, the Company incurred merger-related charges
of $4.1 million in connection with the Merger with MicroSim relating primarily
to financial advisory fees, legal and accounting services, personnel severance
costs and the cancellation and continuation of contractual obligations. There
were no merger-related costs incurred in the first quarter of 1997.
OTHER INCOME, NET
Other income increased to $494,000 in the first quarter of 1998 from
$448,000 in the first quarter of 1997. This improvement resulted primarily from
higher interest income earned on increased investment balances.
INCOME TAX EXPENSE (BENEFIT)
The effective tax rate for the first quarter of 1998 was 35.0%. This rate
differs from the combined federal and state statutory rate of approximately
38.5% primarily due to the benefit of the Company's foreign sales corporation
and the utilization of research and experimentation tax credits. Income tax
expense (benefit) for the first quarter of 1998 was ($850,000) as compared to
$609,000 for the first quarter of 1997. The income tax benefit in the first
quarter of 1998 is due primarily to the pre-tax loss incurred largely as a
result of merger-related expenses. The estimated effective tax rate for the
first quarter of 1998 and the first quarter of 1997 remained constant at 35.0%.
10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Total cash and cash equivalents were $23.6 million at March 31, 1998 as
compared to $31.6 million at December 31, 1997. Cash provided by operations was
$710,000 for the first quarter of 1998 as compared to $562,000 for the first
quarter of 1997. The increase in cash provided by operations from the first
quarter of 1997 to the first quarter of 1998 was primarily due to a decrease in
accounts receivable and an increase in accrued liabilities partially offset by a
decrease in accrued income taxes and the net loss incurred in the first quarter
of 1998. Cash used in investing activities was $8.7 million for the first
quarter of 1998 as compared to $724,000 for the first quarter of 1997. The
increase in cash used in investing activities from the first quarter of 1997 to
the first quarter of 1998 was due to purchases of investment securities
partially offset by a reduction in the acquisition of fixed assets. Cash used in
financing activities was $87,000 for the first quarter of 1998 as compared to
$28,000 in the first quarter of 1997. The increase in cash used in investing
activities from the first quarter of 1997 to the first quarter of 1998 was
primarily due to the issuance of notes receivable related to employee stock
purchases partially offset by proceeds from the issuance of common stock.
The Company has available borrowing capacity consisting of a commitment for
a $3.0 million line of credit from a commercial bank. The Company believes that
current cash and investment balances, cash flows from operations and the unused
line of credit are sufficient to meet current and anticipated future capital
requirements for at least the next twelve months. The Company currently does
not have any material commitments for capital expenditures. OrCAD has from time
to time evaluated and continues to evaluate opportunities for acquisitions and
expansion. Any such transactions, if consummated, may use a portion of the
Company's working capital or necessitate additional bank borrowings. No
assurance can be given that additional borrowing capacity will be available or
that if available, such financing will be obtainable on terms favorable to the
Company or its stockholders.
The Company is aware of the issues associated with the programming code in
existing computer systems as the millennium (year 2000) approaches. The "year
2000" issue is not expected to have a material adverse effect on the business,
financial condition or results of operations of the Company.
VARIABILITY OF OPERATING RESULTS
The Company's quarterly operating results may vary significantly in the
future depending on factors such as increased competition, timing of new product
announcements, releases and pricing changes by the Company or its competitors,
length of sales cycles, market acceptance or delays in the introduction of new
or enhanced versions of the Company's products, timing of significant orders,
seasonal factors, mix of direct and indirect sales, product mix, and economic
conditions generally and in the EDA industry specifically.
A substantial portion of the Company's revenue in each quarter results from
orders booked in that quarter. The Company's expense levels are based, in part,
on its expectations as to future revenue. If revenue levels are below
expectations, operating results are likely to be adversely affected. In
particular, net income may be disproportionately affected by a reduction in
revenue because only a certain portion of the Company's expenses varies with its
revenue.
11
<PAGE>
Acquisitions of complimentary businesses are an integral part of the
Company's overall business strategy. There are several risks associated with
this strategy including, but not limited to, integration of sales channels,
training and education of sales forces for new product offerings, integration of
product development efforts, retention of key employees, retention of systems of
internal controls, and integration of information systems. All of these factors
can impair the Company's ability to forecast, to meet quarterly revenue and
earnings targets, and effectively manage the business for long-term growth.
While the Company is aware of and is addressing such issues, there can be no
assurance that these challenges will be effectively met.
12
<PAGE>
PART II - OTHER INFORMATION
ITEM 2: CHANGES IN SECURITIES
During the first quarter of 1998, the Company sold securities without
registration under the Securities Act of 1933 (the "Securities Act") upon the
exercise of stock options granted under the Company's stock option plans. An
aggregate of 24,744 shares of Common Stock were issued at exercise prices
ranging from $.35 to $3.50. These transactions were effected in reliance upon
Rule 701 promulgated pursuant to the authority of the Securities and Exchange
Commission under Section 3(b) of the Securities Act.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: 27.1 Financial Data Schedule for 1998
27.2 Financial Data Schedule for 1997
(b) The Company filed a report on Form 8-K, under Item 2, dated January
29, 1998. Pursuant to this report, the Company announced the completion of its
merger with MicroSim Corporation and filed as an exhibit the Agreement and Plan
of Merger dated October 13, 1997, by and among OrCAD, Inc., OCA Merger
Corporation, and MicroSim Corporation as filed with the Securities and Exchange
Commission on December 12, 1997. No financial statements were filed as part of
this report.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OrCAD, Inc.
Dated: May 15, 1998 /s/ P. David Bundy
------------------
Vice President, Finance and Secretary
(Principal Financial and Accounting Officer)
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 23,551
<SECURITIES> 10,435
<RECEIVABLES> 8,522
<ALLOWANCES> 913
<INVENTORY> 627
<CURRENT-ASSETS> 44,854
<PP&E> 7,709
<DEPRECIATION> 4,171
<TOTAL-ASSETS> 55,205
<CURRENT-LIABILITIES> 10,731
<BONDS> 0
0
0
<COMMON> 93
<OTHER-SE> 44,362
<TOTAL-LIABILITY-AND-EQUITY> 55,205
<SALES> 11,641
<TOTAL-REVENUES> 11,641
<CGS> 1,425
<TOTAL-COSTS> 14,564
<OTHER-EXPENSES> 7
<LOSS-PROVISION> 155
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,429)
<INCOME-TAX> (850)
<INCOME-CONTINUING> (1,579)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,579)
<EPS-PRIMARY> (.17)
<EPS-DILUTED> (.17)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-START> JAN-01-1997 JAN-01-1997
<PERIOD-END> DEC-31-1997 MAR-31-1997
<CASH> 31,618 22,889
<SECURITIES> 3,408 13,850
<RECEIVABLES> 9,593 6,348
<ALLOWANCES> 793 738
<INVENTORY> 675 773
<CURRENT-ASSETS> 47,849 45,417
<PP&E> 7,425 6,257
<DEPRECIATION> 4,065 3,835
<TOTAL-ASSETS> 56,907 50,965
<CURRENT-LIABILITIES> 10,734 8,183
<BONDS> 0 0
0 0
0 0
<COMMON> 92 91
<OTHER-SE> 46,062 42,484
<TOTAL-LIABILITY-AND-EQUITY> 56,907 50,965
<SALES> 43,995 9,867
<TOTAL-REVENUES> 43,995 9,867
<CGS> 6,456 1,598
<TOTAL-COSTS> 40,123 8,726
<OTHER-EXPENSES> 17 6
<LOSS-PROVISION> 36 (19)
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 5,713 1,589
<INCOME-TAX> 1,809 609
<INCOME-CONTINUING> 3,904 980
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 3,904 980
<EPS-PRIMARY> .43 .11
<EPS-DILUTED> .41 .10
</TABLE>
